Jeff Bezos and WaPo

Some thoughts on the $250m acquisition that everyone can’t stop talking about.

It’s hard not to imagine that there’s some political/soapbox angle to the purchase. The Atlantic has a good run down of what’s known about Bezos’ politics. He backs gay marriage and internet sales taxes (both of which WaPo also backed) and has contributed to several Democratic and Republican candidates. Amazon runs a PAC that he contributes to, which also splits its donations between the parties. He’s not overtly political, though, so it’s also hard to imagine that his only goal is to have a pulpit.

The Washington Post company is public (NYSE:WPO), so this takes their primary asset and makes it private. Since Bezos didn’t buy it through Amazon, he will have control over it without any other shareholders having a say. That may factor into his decision but, again, he’s not really known for preaching politics so Murdoch-style tactics don’t seem to be the motivator. Interestingly, Education and Cable TV content make up 75% of WaPo Co.’s revenue — newspaper was only 14% — and they have a very over funded pension plan ($604m over according to their 2012 annual report), so they’ll be just fine.

As others have pointed out, there’s an obvious content play for Kindle (and other ventures). Revenue from online publishing was up 15 percent in the Q2 2013 (YoY). Revenue from online display advertising was up 25 percent in the second quarter, 21 percent for the first six months of the year. Their Paywall went up on June 12th and must be netting some decent revenue, much like the NYT saw from theirs. Killing the print business and focusing on digital delivery might still see it be a viable business, but I can’t help thinking that the story here is not about the business. If this was a pure content play or ad play, he would have bought it through Amazon.

A theory: Bezos’ net worth according to Forbes is $25.2bn, so the purchase price of $250m is 0.9% of his money. At that price, he could be buying WaPo for nostalgic reasons. Think of it as philanthropy in a sense: supporting an institution he believes in with a donation that doesn’t even materially impact his net worth in any way. Through his Bezos Expeditions fund he’s spent $42m on the Long Now 10,000 Year Clock project, donated $15m to Princeton and $10 million to the Museum of History & Industry in Seattle, and untold sums (millions?) recovering F-1 rockets from the sea floor. This is certainly more money, but significantly more relative to his fortune. Maybe he just really loves WaPo and doesn’t want to see it die.